Small brands swipe shelf space from big distillers

Craft brands and niche categories are outpacing more established names in the US spirits industry, creating increased competition for shelf space, a new report has found.

Analysts have found that consumer interest in craft brands has generated increased competition in the spirits industry

According to Technomic analysts, smaller spirits brands and sectors are growing at a faster rate than leading firms, and are in some cases taking their market share.

In 2014, vodka was found to hold one third of total spirits volumes in the US, however its pace of growth was “eclipsed” by several smaller categories, including Irish whiskey, liqueurs and straight American whiskey.

“Many of the categories and brands that dominate the industry are being challenged,” said Donna Hood Crecca, senior director of Technomic.

“The trend creates increased competition for shelf space in bars and at retail and for consumer dollars in 2015.

“The monster categories such as light beer and vodka are feeling the heat from the likes of craft beer and Bourbon, and the legacy brands are increasingly pitted against upstarts in the battle for operator attention and consumer occasions.”

Analysts also claimed whisky and vodka brands whose performances often influence total category trends decreased in volume.

While beer once again shed volumes in 2014, overall volumes of spirits and beer continued to increase, driven by consumer interest in “unique” production processes.

“Changing flavour preferences and greater interest in production methods and new formulations are driving factors,” said Eric Schmidt, director of research at Technomic.

“We’re tracking a sharp decline in sweet flavour profiles and a rise in liquids with real heat or herbal nuance in the spirits industry, and momentum among beer, spirits and even wine products with unique production processes.”

In December last year, Technomic predicted that alcohol sales will grow modestly in US bars and restaurants in 2015 as a result of “greater consumer confidence”.